Malaysia's AI Semiconductor Supply Chain Gains Momentum as Sector Outlook Strengthens

Malaysia’s technology sector is poised for sustained growth as AI-driven semiconductor demand, rising exports, and stronger earnings visibility reinforce confidence in the country’s expanding supply chain.

Malaysia’s AI Outlook Strengthens

Malaysia’s technology sector is entering a stronger growth phase as the global artificial intelligence (AI) semiconductor boom continues to accelerate, supported by record investment in AI infrastructure and expanding demand for advanced chip production.

Apex Securities maintained its OVERWEIGHT recommendation on the Malaysian technology sector for the second half of 2026, citing a favorable combination of rising semiconductor demand, improving earnings visibility and Malaysia’s growing role in the global AI supply chain.

The positive outlook follows the World Semiconductor Trade Statistics (WSTS) projection that global semiconductor sales will jump 89.9% year-on-year to US$1.5 trillion in 2026, driven primarily by explosive demand for AI memory chips, including high-bandwidth memory (HBM) and DRAM.

At the same time, major cloud service providers are significantly increasing AI-related capital expenditure, creating sustained demand for semiconductor manufacturing equipment, advanced packaging and testing services.

Malaysia is already benefiting from these trends. Electrical and electronics (E&E) exports surged 39.5% year-on-year in January 2026, while integrated circuits accounted for roughly one-third of the country’s total exports during the period. The country’s established semiconductor assembly, testing and packaging ecosystem, alongside ongoing investment under the National Semiconductor Strategy, further strengthens its competitive position.

Apex Securities believes the current premium valuation of the KLTEC Index remains justified because company earnings have yet to fully reflect the ongoing AI-driven upcycle. The firm noted that stronger order backlogs and longer customer visibility distinguish the current semiconductor cycle from previous ones.

Among its preferred stocks, Apex Securities raised its target price for ViTrox to RM9.35 while maintaining a BUY recommendation. QES Group was also upgraded to BUY on improving order momentum, while Inari Amertron was lifted to HOLD as prospects improve in radio frequency and photonics.

The brokerage expects companies with clear earnings catalysts, strong execution and multi-year order visibility to remain the primary beneficiaries as Malaysia strengthens its position in the expanding global AI semiconductor supply chain.